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Yearly Archives: 2014
LLC Members Personally Liable For Failure To Pay Wages?
As I wrote in a post earlier today [Annual Notice Provision Eliminated From Wage Theft Prevention Act], Governor Cuomo signed legislation yesterday amending certain provisions of the Wage Theft Prevention Act. In addition to eliminating the annual notice provision, the amendments enhance certain penalties and make it easier to pursue repeat violators who attempt to evade the provisions of the act by setting up new businesses with similar operations and ownership.
One of the other significant provisions of this legislation [L.2014, ch.537], is the inclusion of an amendment to the New York Limited Liability Company Law. The amendments now impose personal liability on the members of a limited liability company with then ten largest ownership interests for the failure of the company to pay the wages of its employees. These amendments are similar to provisions already contained in the New York Business Corporation Law. Although the liability is also joint and several, employees wishing to take advantage of these provisions must first satisfy certain conditions, including providing written notice to the member against whom a claim will be made.
Over the last several years, the Legislature has made it a priority to protect employees from employers who fail to pay wages. These amendments are part of that effort, and the they simply bring the provisions of the Limited Liability Company Law more in line with the provisions that already apply to most other business entities in New York.
Annual Notice Provision Eliminated From Wage Theft Prevention Act
In January, I wrote about the notice requirements of the Wage Theft Prevention Act that apply to both new employees and existing employees. [See Employers: Do Not Forget Your Annual Employee Wage Theft Prevention Act Notice]. The Act required employers in New York to provide all new employees with a written notice setting forth the employee’s rate of pay and other pay-related information. The Act also required employers in New York to provide another written notice containing the same information to all other employees annually, before February 1 of each year.
Not surprisingly, the annual notice provision was roundly criticized by employers and business groups across the state because of the administrative burden and expense imposed on employers. The Rochester Business Alliance noted that the required written notice contained the same information that employees already receive on their paystubs.
Earlier this year, the Legislature passed an amendment to the Wage Theft Prevention Act, eliminating the annual notice requirement, and yesterday, Governor Cuomo signed the bill into law (L.2014, ch.537). The amendments also increase certain penalties for non-compliance and include provisions making it easier to establish successor liability against employers who attempt to evade the provisions of the law by purporting to set up new companies.
In his approval memorandum, the Governor noted that he was signing the bill into law, even though there were some technical and substantive problems that will need to be addressed. I would expect the Legislature to act on these issues early in the new year.
Fire District Materials: Batavia Conference 2014
I am once again looking forward to speaking at the Western New York Fire District Officers Legislative Association Workshop in Batavia, New York, on September 27, 2014. As I did last year, I wanted to write a short post as a resource for those attend. Unfortunately, several of the documents I intended to reference (with links) are publications of the New York State Comptroller’s Office, and that website seems to be unavailable at the moment.
Although there will be a lot of important topics covered by the panelists, I will focus my remarks on two areas: (1) recent amendments to the procurement statutes; and (2) a general discussion of the Nonprofit Revitalization Act of 2013, and its applicability to volunteer fire companies.
Last year, I spent quite a bit of time discussing the expanded “piggybacking” exception to competitive bidding in New York. Shortly after last year’s conference, the statute was amended again to further expand this exception to include contracts awarded on the basis of “best value” in a manner consistent with New York’s bidding statutes. Following this amendment, the Comptroller issued an amended bulletin in November 2013, expanding on its earlier discussion. There is a link to the bulletin in my post from last year, and it should bring you to the updated bulletin.
Shortly before the Nonprofit Revitalization Act of 2013 became effective on July 1, 2014, one of my colleagues wrote an excellent summary of the key provisions of the Act. A copy of the article, Nonprofit Best Practices Now Mandatory, may be downloaded by following the link. If you would like to have one of our attorneys review your company’s bylaws and make recommended changes to ensure compliance with the Act, please feel free to contact me.
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Court of Appeals Upholds Local Zoning Laws Restricting Hydrofracking
Yesterday, the New York Court of Appeals–New York’s highest court–decided an important land use case involving town-wide restrictions prohibiting hydraulic fracturing, also known as hydrofracking. The case has been widely reported in the media, but I think it is worth reading the actual decision because it contains a good discussion of preemption in the context of a municipality’s home rule authority to regulate land uses. You may read it here: Matter of Wallach v. Town of Dryden (2014 NY Slip Op 04875).
In upholding the home rule authority to prohibit hydrofracking, the Court held:
At the heart of these cases lies the relationship between the State and its local government subdivisions, and their respective exercise of legislative power. These appeals are not about whether hydrofracking is beneficial or detrimental to the economy, environment or energy needs of New York, and we pass no judgment on its merits. These are major policy questions for the coordinate branches of government to resolve. The discrete issue before us, and the only one we resolve today, is whether the State Legislature eliminated the home rule capacity of municipalities to pass zoning laws that exclude oil, gas and hydrofracking activities in order to preserve the existing character of their communities. There is no dispute that the State [*12]Legislature has this right if it chooses to exercise it. But in light of ECL 23-0303 (2)’s plain language, its place within the OGSML’s framework and the legislative background, we cannot say that the supersession clause — added long before the current debate over high-volume hydrofracking and horizontal drilling ignited — evinces a clear expression of preemptive intent. The zoning laws of Dryden and Middlefield are therefore valid.
Matter of Wallach, 2014 NY Slip Op 04875 at *11-12 (2014).
Nonprofit Revitalization Act Provisions Now Mandatory
The New York Nonprofit Revitalization Act of 2013 resulted in a number of significant changes to the New York Not-For-Profit Corporation Law. Many of those changes are effective as of July 1, 2014. My colleagues in our firm’s business department just published an excellent article summarizing the new requirements, and outlining what nonprofit board members must do to ensure that the organization they serve remains in compliance. Please share this information with anyone you know who serves on a nonprofit board.
Here is a link to the article: Nonprofit Best Practices Now Mandatory.
For more information about this or the other services provided by our firm, please feel free to contact me.
Reminder: Open Meetings Law Now Requires Prior Disclosure of Agendas, Proposed Resolutions, and Other Documents
A little over two years ago, I wrote about an amendment to New York’s Open Meetings Law requiring prior disclosure of documents scheduled to be discussed at a meeting of a public body. As of February 2, 2012, the Open Meetings Law requires public bodies to make certain documents–including agendas as well as any other document scheduled to be discussed at a public meeting–available before or during the meeting when they will be discussed.
Documents, such as proposed resolutions, laws, rules, regulations, policies or any amendments thereto that are scheduled to be discussed during an open session of a public meeting, should be made available upon request “to the extent practicable as determined by the agency or department” prior to or at the meeting during which the records will be discussed. For more information about the requirements imposed by this amendment, please see my earlier article here.
I’ve had this issue come up several times in the last month or so, and wanted to be sure that my municipal clients are aware of this relatively new requirement. Failure to comply with this or any other requirement of the Open Meetings Law could result in a court voiding any action taken, and the public body may be required to pay attorney’s fees and attend a training session on the requirements of the Open Meetings Law sponsored by the Committee on Open Government.
Walkers, Runners, and Bicyclists: Tune Up Your Auto Insurance!
Has spring sprung in Rochester? On the way home, I heard there is a chance flakes will fly before the week is out. I think we’ve had enough flakes for a while. Let’s hope Mother Nature agrees!
If it is indeed springtime, we will all be happy to get outside and enjoy the weather. It’s time to dust off the old sneakers, and tune up the bicycle. But before you do so, I have some recommended reading for you.
One of my partners just wrote an excellent article on our firm’s website explaining why it is important to tune up your automobile insurance policy. Many people don’t realize that parts of your own automobile policy may cover you if you are a pedestrian (e.g., walker or runner) or even a bicyclist, and you are injured by a careless driver. This can be especially important if the negligent driver is either uninsured or carries only the statutory minimum amount of liability insurance.
Here is the link to the article: Walkers, Runners and Cyclists: Don’t Forget to Tune-Up Your Insurance!
Employers: Do Not Forget Your Annual Employee Wage Theft Prevention Act Notice
Commencing this year, one of my new management tasks at our law firm will be to conduct staff reviews. We have a wonderful, experienced staff, and I am looking forward to meeting with all of them in the coming days. It has been our practice to provide our employees with a written document setting forth each employee’s rate of pay and other information at the time of this review. While this is good practice, it is also now the law. I thought I’d take the time to write a short post to remind employers what the requirements are in New York.
As I prepared for my new role, I reviewed the requirements and model forms, which must be provided to all employees annually on or before February 1. We previously wrote about those requirements in a series of articles on our firm’s website, and rather than repeat them, I will include links below. The article about the forms also contains links directly to the state’s model forms, which can also be found on the Department of Labor website.
Here are links to our previous series of articles on the Wage Theft Prevention Act and its notice requirements:
New Notice Requirements for New York Employers
Expanded Notice and record Keeping Requirements for New York Employers
New York Enhances Penalties for Failure to Comply with Labor Law
Wage Theft Prevention Act Model Notices Issued by the NYS Department of Labor
The Albany Business Review recently reported here that the Business Council of New York estimated that the private sector spends $50 million a year complying with this notice provision. The same article also reported that the Executive Deputy Commissioner of Labor testified at a hearing in November, that even though Department of Labor investigators have processed roughly 7,000 new cases since the law was enacted three years ago, none of the complaints cited the annual notice requirement.
While the notice provision continues to be criticized, efforts to eliminate it have not passed the legislature (yet?). So, for now, each employer in New York must continue to provide this annual notice before February 1, as I will do later this week.
Court Rules That Cluster Subdivision’s Density and Open Space Restrictions Are Not Encumbrances
Last week, the Fourth Department issued the latest decision in the 17 year saga involving the development of the Ellison Heights Project–a multi-phased cluster subdivision within the Town of Penfield, New York. As the court noted in the first round of litigation involving this project:
Cluster development. . . is a form of subdivision development which enables units to be located on a site in a manner that does not comply with the bulk requirements of the applicable zoning law. . . . Cluster development enables dwellings or other structures to be constructed on the most suitable portion of the property, thereby resulting in the preservation of tracts of land in their natural state.
In order to accomplish the clustering of development, a town board may authorize the planning board to approve an alternate development which deviates from minimum area, side and rear yard, depth, frontage, and similar requirements. Matter of Penfield Panorama Area Community, Inc. v. Town of Penfield Planning Board, 253 A.D.2d 342, 345 (4th Dep’t 1999).
The most recent case involving this project, Ellison Heights Homeowners Ass’n, Inc. v. Ellison Heights LLC, 2013 N.Y. Slip Op. 08685 (4th Dep’t 2013), involved a dispute between the owners of the already developed Phase I of the project, and the developer, who was seeking modifications to Phase II. Both properties were originally owned by the same developer, who obtained approval from the Penfield Planning Board to develop the parcel into apartment buildings and town home units as a cluster development.
After acquiring the project, the present developer obtained approval from the Planning Board in 2005, to amend the site plan, and develop it in phases, resulting in a reduction of the number of townhomes to be developed on Phase I, among other things. The townhomes were ultimately constructed and the property on which they were located was transferred to a homeowners association (the “HOA”).
In 2011, the developer again applied to the Planning Board to further amend its site plan by changing the configuration of the apartment buildings and reducing the number of units from the 199 that were originally approved to 180. In doing so, the developer sought to develop Phase II using the same density and open space restrictions established by the Planning Board when the project was originally approved in 1999, thereby incorporating the open space of the HOA’s property in its density calculation.
While the application was pending before the Planning Board, the HOA commenced an action against the developer and the Town of Penfield seeking, among other things, declarations regarding its property rights pursuant to Article 15 of the Real Property Actions and Proceedings Law (the “RPAPL Claims”). The HOA alleged that the defendants had no right to restrict development on the HOA’s property by using the open space located on the HOA’s property in the developer’s calculation of the density of the development on its own property.
The trial court dismissed the RPAPL Claims against all defendants, and dismissed the remainder of the complaint against the Town (in the interest of full disclosure, my colleague, Joe Platania, represented the Town of Penfield in the 1999 case, and I represented the Town on this case, and continue to represent the Town in the Article 78 Proceeding which is still pending). The trial court also denied the HOA’s motion to amend the complaint, and the HOA appealed both of those orders in the consolidated appeals that were just decided.
On appeal, the HOA argued that the trial court erred in determining that documents on file with the Town permanently encumber and restrict further development of its property. According to the HOA, those documents, which reference the density and open space restrictions for the cluster development, are not within its chain of title and thus cannot form the basis for an encumbrance on its property. This argument was rejected by the Appellate Division.
In affirming the trial court, the Appellate Division made three key rulings:
- The Court rejected the HOA’s arguments regarding the RPAPL Claims, because “the density and open space restrictions on further development of [the HOA’s] property are the result of zoning regulations and do not amount to encumbrances that must be recorded in [the HOA’s] chain of title.” The Court held that “the density and open space conditions that restrict further development of plaintiff’s property are the result of the Town’s ‘ability to impose such conditions on the use of land through the zoning process,’ which conditions are ‘meaningless without the ability to enforce those conditions, even against a subsequent purchaser'” (quoting O’Mara v. Town of Wappinger, 9 N.Y.3d 303, 311 [2007]). Therefore, because the density and open space restrictions were the result of the zoning process, and not property encumbrances that must be recorded in the HOA’s chain of title in order to be enforceable, the Court concluded that dismissal of the RPAPL Claims–rather than the issuance of declarations pursuant to RPAPL–was the proper remedy.
- Perhaps not surprisingly, the Court also held that “either party could apply to the Planning Board for modification of the density and open space restrictions on its property and, if [that party] disagreed with the Planning Board’s determination, [that party’s] remedy would be to commence a proceeding pursuant to CPLR article 78 after exhausting its administrative remedies.” While this notion has been commonly understood to be true among land use practitioners, this may be the first time an appellate court explicitly expressed this principle.
- Finally, the Court held that the complaint was properly dismissed against the Town. According to the Court, “The Town will not ‘be inequitably affected by a judgment in the action’ (CPLR 1001[a]), nor does the Town ‘have an estate or interest in the real property which may in any manner be affected by the judgment.'” Thus, the Town is not a necessary party to the RPAPL Claims.
This may not be the last word on the Ellison Heights Project. As noted above, there is an Article 78 Proceeding currently pending, and the HOA is expected to perfect its appeal in the coming weeks.
Rochester Law Review 